USD/CAD hovers at two-month high

The heightened odds of Fed rate hike bets and the resulting broad based USD rally pushed the USD/CAD pair to a two-month high of 1.3402 levels. The spot currently trades around 1.3390 levels.

Oil prices dropped for the third straight session on Thursday to log their lowest finish in about three weeks after US government data showed domestic oil inventories hit record high.

The sell-off in oil prices strengthened the offered tone around the Canadian dollar.

The focus today is on Yellen speech. The two-year yield, which currently hovers at highest since 2009, could rise even further if Yellen strengthens the case for a March rate hike.

USD/CAD Technical Levels

A break above 1.34 (zero figure) would open the doors for 1.3450 (76.4% of 1.3598-1.2968), above which a major hurdle is seen at 1.35 (zero figure). On the other hand, a breakdown of support at 1.3387 (Jan 20 high) could yield a sell-off to 1.3358 (61.8% of 1.3598-1.2968). A violation there would expose 1.3317 (5-DMA).